Test driving the m-Internet

Leading wireless players and venture  continue pouring money into mobile Internet services and devices--with visions of U.S. consumers embracing a “mobile lifestyle” and toting WAP-phones or wireless personal digital assistants. Yet skeptics warn of slow market adoption: ’Consumers may express disappointment with cumbersome WAP devices, limited  applications, and fragmented, unreliable networks, while operators may become loathe to plop down billions for 3G technology when they can stretch the useful life of 2.5G.

Despite the recent economic slowdown, nosedive in tech stocks and devaluation of many wireless companies, segments of the market are sure to move ahead, and these will drive demand in other segments down the road.  One example is what the industry calls ‘in-vehicle telematics’-- wireless data services in automobiles that are being launched this year and could be the “next big thing.”

Betting on In-Vehicle Wireless

The U.S. in-vehicle segment has several advantages that will speed adoption--including a highly receptive user base, the near-term potential for services that consumers value and fewer technology limitations. These services will guide drivers safely through cities by accurately informing them of local traffic problems. They’ll entertain passengers with specialized content, Internet radio and back-seat children’s games.

Emergency roadside assistance and navigation will be one button away or, in some cases alerted automatically. Consumers are becoming accustomed to Internet- and vehicle-based navigation services. For example, MapQuest delivers navigation information over the Internet, and Hertz Neverlost has effectively deployed global positioning system (GPS) technology.

A key uncertainty driving market adoption, however, is the winning revenue model: Will consumers pay monthly for services? Or will they prefer to pay a la carte?

Combining the m-Internet with GPS lets operators send personalized information along with location-based information--and lets service providers offer automatic distress or assistance request services. A key uncertainty driving market adoption, however, is the winning revenue model: Will consumers pay monthly for services? Or will they prefer to pay a la carte? For maximum flexibility, first movers like OnStar, Televigation and Clarion AutoPC are likely to team up with operators in their bid to win the greatest number of high-value consumers.

As most players know, in-vehicle systems have significant advantages over hand-held devices: they are free from battery power limitations, and they can be “souped-up” with extra processing power from in-dash networked servers and data storage. Most players, however, are just beginning to appreciate the strategic implications of such advantages as extra processing power. 

An innovative operator could leverage the nationwide network of a company like Shell to offer high-speed, wireless LAN connections. This would allow vehicles to download large amounts of data during refueling. This is one way to enhance service offerings, while overcoming wireless bandwidth limitations. It also means that service providers and application developers can more easily bring services to market with fewer concerns about the limitations of today’s hand-held devices or 2½G networks.

The car, in fact, is an ideal environment for certain types of data services. Given the current state of in-vehicle information--impersonal ad-filled radio, repetitious traffic reports and bulky paper maps--consumers will find data services desirable and useful. If these services create a unique and exciting experience, the pace of adoption will increase. In fact, the vision of a seamlessly connected experience--from office (seated with high productivity) to vehicle (seated, but hands and eyes free) to home (somewhere in-between)--is not far away.

Already on the Table

We don’t need to look hard to find evidence that investors and manufacturers share this perspective. Several technology platforms and devices are already in the market or planned for  launch as early as this year. Some of the more visible examples are OnStar, MobileAria, Wingcast, car.NET and Sun INV (see table).

Through these networks travelers can e-mail friends, make restaurant reservations, locate gas stations and even purchase fuel in advance at a discount by using voice-control and dashboard displays.

Networks already deployed in some 2001 model cars synchronize dashboard devices with standard mobile hand-helds and with instruments that monitor vehicle performance. Through these networks travelers can e-mail friends, make restaurant reservations, locate gas stations and even purchase fuel in advance at a discount by using voice-control and dashboard displays.

Such network investments emphasize two trends that will speed adoption: modularity and integration. Modular designs can be unplugged and upgraded--a benefit if technology continues to evolve faster than vehicle life. Integration of data services with standard car functions makes for a superior product and improved consumer experience. For example, OnStar automatically controls radio volume to reduce background noise when users make voice-control commands. Modular designs and integration make consumers more willing to pay for the installation of wireless data technology in their cars.

Networking is both important and significant; it allows interoperability of multiple devices--phones, palms, in-vehicle computers, data storage and in-vehicle sensors. Networks have the advantage of providing a standard way for all these devices to communicate, which allows equipment and software manufacturers to produce modular designs that provide a path to continuous upgrades. It also means that device manufacturers can develop specific solutions for particular applications, providing a market for niche players who believe they have a preferred solution. This frees the segment from the “factory installed” model that limits consumer choice and requires special dashboard design.

Finally, the combination of satellite and wireless Internet services is another area of big money on the table. Satellite providers XM and Sirius are already marketing factory-installed units and will be up and running this year. These examples support the idea of in-vehicle custom services, but they are currently limited by a lack of locally-customized content, such as local traffic. Nonetheless, early adopters of these services may be primed for the larger possibilities of in-vehicle telematics. In fact, there is reason to expect that satellite and wireless services could be merged to create new offerings, such as in-vehicle Internet access to program satellite radio preferences--by time of day.

In-vehicle telematics looks like a winning bet--even if adoption of hand-held wireless data services remains slow. Early adoption by the in-vehicle market will awaken U.S. consumers to m-lifestyle possibilities at home, in the office and on the street.
David Fishman is Managing Director and Jay Goldman is Senior Engagement Manager of Strategic Decisions Group, Menlo Park, CA. Their e-mail addresses are dfishman@sdg.com and jgoldman@sdg.com, respectively.

Visit Strategic Decisions Group online.

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WIRELESS TECHNOLOGY PLATFORMS
Service/Platform	Key Players/Partners
OnStar 3-button system for in-vehicle assistance, monitoring, emergency, communication services, as well as voice-activated wireless phones used for phone calls, email access, sports scores, or other data on the Internet.	GM, Motorola
Wingcast Wireless auto navigation, safety, security, entertainment	Ford, Qualcomm
MobileAria Handsfree in-vehicle mobile internet service platform	Delphi, Palm
ATX Response centers and web-based in-car information, entertainment & emergency services	Mercedes, Ford/Lincoln, Jaguar, Nokia, Alpine, Sirius Radio
CellPort Standards for in-vehicle wireless connectivity; handsfree systems & mobile network servers	Cisco, Nextel, @Road
car.NET In-vehicle network infrastructure and tools, server platform	Microsoft, InfoMove (a partner providing personalized, location-specific content)
Sun INV Sun wants Java to be the base layer technology provider and is working closely with automakers, consumer electronics manufacturers, and content providers to deliver next generation INV products to market	OnStar, Cyberonix, aJile Systems, Mitsubishi Electric
WAVE system Integrated, wireless in-vehicle mobile office environment	Omnipoint
Response Services LLC Call center and in-vehicle services	AAA
Televigation Provides real-time navigation instructions dynamically to the user, taking into account speed, directions and driver input. Services include voice-activated directions, maps, Yellow Pages, and traffic reports.	Sprint PCS, airbiquity, Ericsson
Clarion AutoPC In-dashboard navigation system for real-time vehicle diagnostics, speed and distance information. Users can have email sent via FM radio waves and play MP3 files.	Intel, Microsoft, Daewoo
Sirius Radio 100 channel digital quality audio programming via satellite	Ford, DaimlerChrysler, BMW, Sony, Alpine, NPR, Discovery Channel
XM Satellite Radio 100 channel digital quality audio programming via satellite	Motient, GM, Clear Channel Communications, DirectTV
Source: Company websites return to article